An Introduction to Marx’s Capital—Part-11

(This is based on “Marx’s Capital” written by Ben Fine and Alfredo Saad-Filho and translated into Telugu, printed by Prajasakti Book House))

                            (For Part-10, please see the blog entry dated 22-1-2012)

Chapter 3--Capitalist Exploitation

Capitalism’s distinguishing feature is wage labour

1. Capitalism becomes the typical mode of production  of a society when (a) labour power becomes a commodity and it is sold by its owner the worker to the capitalist in return for wage (b) the wage workers are hired regularly for the production of commodities for sale in order to get profit.  Therefore capitalism is not merely a system of commodity production, but it is distinguished by the system of wage labour. There is no capitalism without wage labour.

Simple Commodity Exchange

2. Beyond the phenomenon of bartering which is historically limited, the exchange of commodities is carried out through the medium of money.

3. Let us consider the simple commodity exchange where in the individual who owns a commodity wants to exchange his commodity for another commodity. First his commodity C has to be exchanged for money M. This is the sale represented by C—M. Then he purchases another commodity C required by him with this money M. This purchase is represented by M—C. The entire circuit is C—M—C.

4. The two ends of this circuit are represented by C. It is not because they are the same thing. No body will exchange a commodity with the same commodity. They are different commodities. But their value is the same. This is because the commodity circulation by itself cannot add any value.

5.  If it is assumed that in this exchange of commodities one gains by selling a commodity above its value, it means the buyer loses. But it is not possible for every seller to sell above value .If every seller can cheat by selling his commodity above its value, then, as a purchaser (since no body can be a mere seller without being a purchaser), he will lose since he has to purchase the commodity required by him above its value.  Hence it has to be assumed that as a whole, the commodities are exchanged at their value.

6. In the simple commodity exchange, with the circuit C—M—C, the value of the C at both ends is the same. It starts with the sale of a commodity and ends with the purchase of a commodity.

Capitalist Exchange

7. To start his production, the capitalist must buy with his money  two types of commodities—(a) land, building, machinery, raw materials, electricity etc (means of production) and (b) the labour power.

8. The worker must be willing to sell his commodity labour power, to the capitalist. But this willingness, this freedom to sell his  labour power comes to the worker only when he has no means of production and hence forced to sell his labour power for wage,  so that , with that wage he can purchase the commodities  necessary for his and for his family’s consumption. Without selling his labour power, the worker cannot get work.
9. Therefore in capitalist society, the worker must sell his labour power (a) to get work, and (b) to get wage for consumption and survival.

10. It is to be noted that the capitalist circulation of commodities starts with money M. With his money the capitalist buys the means of production (land, building, machinery, raw amterials etc) and the labour power that works on those means of production. Let us denote together both these two kinds of commodities purchased by labour, with C. Then, M—C (Money of the capitalist purchased the commodities required for production.)

11. After thus gathering the means of production and labour power, the capitalist organises and supervises the process of production and gets the output, the newly produced commodity.The capitalist sells the commodity thus produced, in the market, for money Mʹ. Evidently the money received by the capitalist by selling his product should be more than the money he utilised for purchasing the inputs and labour power. Otherwise he will not undertake the production process. Therefore to indicate that the money received by the capitalist by selling his product is more than the money he invested in producing the product, it is indiacated as Mʹ (M with the symbol ʹ on its top). Therefore the capitalist’s exchange (circulation) is M—C—Mʹ. In this, the value M gets increased or expanded as Mʹ through the process of production. The difference between the Mʹ and M is s, the surplus value.  

12. Therfore capital is self expanding value. Money will work as capital only when it generates more money, that is, when it is used in production to generate surplus value.

13. But we have so far examined the activity of the industrial capitalist who produces commodities or provides services and other activities,  resulting in surplus value.

14. There are other forms of capital—the commercial capital (merchant capital) and money capital (loan capital). But these activities are not creating surplus value.  They are merely transfering the surplus value .The interest on bank’s loan and the profit (margin) of the merchant who helps in selling the products produced by the industrial capital, are only sharing the surplus value generated in the production process.  But they contribute in (a) advancing the value (loan to the industrial capitalist) and (b) in realising the surplus value by selling the products (merchant capital).